10-Q 1 cpi3310710q.txt CAMERA PLATFORMS 10-Q 3-31-07 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [Mark one] [ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2007 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to ________________ Commission File Number: 0-14675 CAMERA PLATFORMS INTERNATIONAL, INC. (Exact name of registrant as specified in its charter) Delaware 95-4024550 (State or other jurisdiction (IRS Employer Identification No.) of incorporation or organization) 10909 Vanowen Street, North Hollywood, California, 91605 (Address of principal executive offices) (Zip Code) (818) 623-1700 (Registrant's telephone number, including area code) Not Applicable (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of May 8, 2006. Common Stock $.0005 par value 23,740,964 (Class) (Number of shares) 2 CAMERA PLATFORMS INTERNATIONAL, INC. CONTENTS

3 CAMERA PLATFORMS INTERNATIONAL, INC. BALANCE SHEETS

See accompanying notes to unaudited financial statements. 4 CAMERA PLATFORMS INTERNATIONAL, INC. STATEMENTS OF OPERATIONS (Unaudited)

See accompanying notes to financial statements. 5 CAMERA PLATFORMS INTERNATIONAL, INC. STATEMENTS OF CASH FLOWS (Unaudited)

See accompanying notes to unaudited financial statements. 6 CAMERA PLATFORMS INTERNATIONAL, INC. NOTES TO FINANCIAL STATEMENTS (Unaudited) NOTE 1 - BASIS OF PRESENTATION The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included. Operating results for the three-month period ended March 31, 2007 are not necessarily indicative of the results that may be expected for the year ending December 31, 2007. For further information refer to the financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 2006. Camera Platforms International, Inc. ("CPI" or the "Company"), was organized in the state of Delaware in 1985 to engage in the business of leasing camera cars and other related equipment to motion picture and television production companies. The Company rents and leases a wide variety of production equipment to the film and video industries. The accompanying financial statements have been prepared on a going concern basis of accounting which contemplates continuity of operations, realization of assets, liabilities, and commitments in the normal course of business. The accompanying financial statements do not reflect any adjustments that might result if the Company is unable to continue as a going concern. The Company's losses, negative cash flows from operations and its working capital deficit raise substantial doubt about the Company's ability to continue as a going concern and the appropriateness of using the going concern basis, which is dependent upon, among other things, an additional cash infusion. There is no assurance that additional cash will be provided or that cash flow from operations will be sufficient to meet the Company's obligations. DOOFF, LLC,the current lender, has indicated that it will no longer fund the Company. On April 20, 2007, the Company sold substantially all of its assets to Moving Vehicular Platforms, Inc, a non-affiliated California Corporation. As a result of this sale, the Company will no longer generate operating revenue or have other sources of cash to pay its obligations as they come due. See Note 2. 2. SUBSEQUENT EVENT - SALE OF ASSETS On April 20, 2007, pursuant to an Asset Purchase Agreement ("the Agreement") entered into in January 2007, the Company sold substantially all of its assets to Moving Vehicular Platforms, Inc. ("MVP"). MVP paid a total purchase price of $500,000. The Company used the $400,000 from the sale to make principal payments on loans made to it by DOOFF, LLC, a related party. As part of the agreement, MVP paid the Company a deposit of $50,000. Of that amount, $25,000 was held in trust by DOOFF, LLC, the Company's secured lender. In addition, MVP entered into a sublease agreement for the Company's premises at 10909 Vanowen Street in North Hollywood, California. Immediately after the consummation of the asset sale, the Company had no operating business or sources of revenues. The board of directors is evaluating several possible options, including offering the Company as a public "shell" corporation to a private operating business whereby the Company's current shareholders would retain some ownership interest in the surviving public corporation. 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Property and Equipment Property and equipment is stated at cost, less accumulated depreciation and amortization and the rental asset valuation allowance. Depreciation and amortization is determined using the straight-line method over the estimated useful life of the property and equipment, using periods ranging from three to ten years. 7 CAMERA PLATFORMS INTERNATIONAL, INC. NOTES TO FINANCIAL STATEMENTS (Unaudited) 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Cash Equivalents The Company considers all highly liquid investments held at financial institutions with maturity dates of three months or less at the time of acquisition to be cash equivalents. Per Share Data The basic income (loss) per share is calculated based upon the weighted average number of common shares outstanding during each period. Diluted income (loss) per share is calculated based upon the weighted average of shares of common stock outstanding and shares that would have been outstanding assuming the issuance of common stock for all dilutive potential common stock outstanding. The Company's outstanding stock options have not been included in the calculation of the weighted average shares of common stock as they would have an antidilutive effect. Concentration of Credit Risk and Accounts Receivable The Company's customers are principally engaged in the production of motion pictures or television programming, or are suppliers to such companies. Credit is extended based on an evaluation of the customer's financial condition. Receivables arising from the granting of credit under normal trade terms are generally due within 30 to 90 days and are generally not collateralized. Collections of accounts receivable have consistently been within management's expectations. The Company maintains an allowance for doubtful accounts for estimated losses that may arise if any of its customers are unable to make required payments. Management specifically analyzes the age of customer balances, historical bad debt experience, customer credit-worthiness, and changes in customer payment terms when making estimates of the uncollectability of the Company's trade accounts receivable balances. If the Company determines that the financial condition of any of its customers has deteriorated, whether due to customer-specific or general economic issues, increases in the allowance may be made. Accounts receivable are written off when all collection attempts have failed. Advertising Costs The Company expenses advertising costs over the period it benefits, generally 12 months. The Company incurred and expensed no advertising costs during the quarters ended March 31, 2007 and 2006. Equipment Leases The Company's leasing operations consist primarily of short-term rentals of camera cars, camera dollies and cranes. These rentals generally range from 8 CAMERA PLATFORMS INTERNATIONAL, INC. NOTES TO FINANCIAL STATEMENTS (Unaudited) 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) one day to several weeks in duration, with occasional rentals of several months. None of the rentals are noncancelable leases, and no contingent rentals are included in the Company's statements of operations. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements. The Company's management estimates the valuation for doubtful accounts, rental asset valuation allowance and the useful lives of property and equipment. Actual results could differ from those estimates and such differences could be material to the financial statements. The Company operates in a single business segment. The Company leases and rents equipment for the motion picture, television and theatrical production and music industries. NOTE 4 - PROPERTY AND EQUIPMENT

The valuation allowance has been reduced by $5,000 and $10,000 which was recorded against and reduced depreciation expense for the quarters ended March 31, 2007 and 2006, respectively. During the quarter ended March 31, 2006, the Company disposed of fully- depreciated equipment with an original cost of $13,000. 9 CAMERA PLATFORMS INTERNATIONAL, INC. NOTES TO FINANCIAL STATEMENTS (Unaudited) 5. NOTES PAYABLE - RELATED PARTIES Notes payable - related party consists of (1) a $1,500,000 term loan, interest only payable monthly at 10% maturing June 2010, secured by all the assets of the Company and (2) a $250,000 revolving line of credit, interest only payable monthly at 10%, which matured June 2006 and also secured by all the assets of the Company. The balance outstanding on this line of credit was $193,000 at both March 31, 2007 and December 31, 2006. These loans are with DOOFF,LLC. One director and two principal shareholders of the Company are also principals of DOOFF, LLC. As of March 31, 2007, the Company was $563,000 in arrears in its interest payments to DOOFF, LLC. and $193,000 in arrears in principal payments due under the terms of these loans. DOOFF, LLC has notified the Company that it is in material default under the terms of the loan agreements, and that no further funds will be made available to the Company. DOOFF, LLC has the right, under the terms of the loan, to foreclose on its collateral. During the quarter ended March 31, 2006, two directors, including the Chief Executive Officer of the Company, loaned the Company, unsecured, $22,000 for operating capital. The amounts were loaned without interest and were repaid in full during April 2006. 6. NOTE PAYABLE - BANK On June 14, 2006, the Company entered into a loan agreement with a non- affiliated bank. The Company borrowed $100,000 at prime (8.25% at March 31, 2007) with payments of $5,000 per month plus interest. The remaining unpaid balance is due June 10, 2007. The loan is guaranteed by a trust controlled by one of the principal shareholders of the Company. The loan proceeds were used to pay a portion of past due interest due to DOOFF LLC. The amount outstanding on the note was $55,000 at March 31, 2007. 7. INCOME TAXES The Company utilizes the liability method under SFAS No. 109 to account for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws expected to apply when the differences are expected to reverse. At March 31, 2007, the Company has net operating loss-carry forwards of approximately $16 million for federal tax purposes, which expire from 2007 to 2026. Because of statutory "ownership changes" the amount of net operating losses which may be utilized in future years are subject to significant annual limitations. The Company also has operating loss carryforwards of approximately $1 million for California tax purposes, which expire from 2007 to 2016. At March 31, 2007, total deferred tax assets, consisting principally of net operating loss carryforwards, amounted to approximately $5.6 million. For financial reporting purposes, a valuation allowance has been recognized in an amount equal to such deferred tax assets due to the uncertainty surrounding their ultimate realization. There was a decrease in the valuation allowance of approximately $3 million in 2006 due to the expiration of a portion of the state loss carryforward. The effective tax rate differs from the U.S. Federal statutory rate principally due to the valuation allowance recognized due to the uncertainty surrounding the ultimate realization of deferred tax assets. During 2007, the Company recognized a reduction in the benefit from tax loss carryfowards, and a commensurate decrease in the valuation allowance, due to the expiration of tax loss carryforwards. 10 CAMERA PLATFORMS INTERNATIONAL, INC. NOTES TO FINANCIAL STATEMENTS (Unaudited) 8. COMMITMENTS AND CONTINGENCIES Lease On January 16, 2004, the Company entered into a new lease of its premises. The lease expires December 31, 2007. The lease expense increases annually based on a cost of living index and the Company is also responsible for common area maintenance charges, utilities, property taxes and insurance. Rent expense with regard to this lease was approximately $25,000 for the quarters ended March 31, 2007 and 2006. As part of the sale of its assets (Note 2) the Company entered into a sublease agreement with MVP for the remainder of the lease term, effective April 2007. Commencing January, 2005 the Company entered into an agreement with DOOFF LLC, its secured lender, by which DOOFF LLC occupies approximately one-half of the space leased by the Company. The Company is recording the amount due to it by DOOFF LLC under this agreement as a payment of past interest due. During each of the quarters ended March 31, 2007 and 2006 the Company recognized $11,000 in rental income, classified as miscellaneous income. 9. SALES TO MAJOR CUSTOMERS AND GEOGRAPHIC AREAS No revenue derived from a single customer accounted for more than ten percent of total revenue during the quarters ending March 31, 2007 and 2006. No geographic area outside the United States accounted for more than ten percent of total sales during the last three years. 11 CAMERA PLATFORMS INTERNATIONAL, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Unaudited) SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. This Quarterly Report on Form 10-Q includes certain forward-looking statements based upon management's beliefs, as well as assumptions made by and data currently available to management. This information has been, or in the future, may be included in reliance on the "safe harbor" provision of the Private Securities Litigation Reform Act of 1995. These statements are subject to a number of risks and uncertainties including, but not limited to, the following: adverse developments with respect to the Company's liquidity or results of operations; the ability of the Company to obtain products and services and negotiate terms with vendors and service providers for current orders; the ability to develop, fund and execute an operating plan for the Company; the ability of the Company to attract and retain employees; competitive pressures from other camera car companies and grip equipment rental companies which may affect the nature and viability of the Company's business strategy; the ability of the Company to attract and retain customers; and the absence of an active public trading market for the Company's common stock. Actual results may differ materially from those anticipated in any such forward-looking statements. The Company undertakes no obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances. Overview The Notes to Financial Statements are an integral part of Management's Discussion and Analysis of Financial Condition and Results of Operations and should be read in conjunction herewith. LIQUIDITY AND CAPITAL RESOURCES The Company has a $250,000 revolving line of credit from its secured lender, DOOFF, LLC, which has matured. The Company owed $193,000 at March 31, 2007, but no further advances are available. In addition the Company has failed to make interest payments totaling $563,000 to DOOFF, LLC. The Company has no source of repayment of these obligations. DOOFF, LLC has the right, under the terms of its loan, to foreclose on the collateral. As a result of the sale of substantially all its assets on April 20, 2007 there are no ongoing operations or other source of revenue to provide cash to meet the Company's ongoing obligations as they become due. 12 CAMERA PLATFORMS INTERNATIONAL, INC. RESULTS OF OPERATIONS The following analysis compares the three months ended March 31, 2007 with the three months ended March 31, 2006. The Company began to sell its rental inventory in the fourth quarter of 2005. Over the last year, the proceeds of these ongoing sales were used to fund operations and repay past due interest to its secured lender. Despite the Company's efforts to increase sales revenue and reduce expenses in the past year, the Company continued to experience a negative cash flow during 2006. After considering several alternatives, on January 30, 2007 the Company entered into an Asset Purchase Agreement with Moving Vehicular Platforms to sell substantially all of its assets. The Board of Directors and management agreed that this asset sale was in the best interest of the Company and stockholders. The Company's stockholders will not receive any cash, stock or other property in connection with, or as a result of, the sale of substantially all of its assets. The Company's common stock will, subject to regulatory considerations, continue to be quoted on the OTC Bulletin Board and the Company will make reasonable efforts to continue to file all required reports with the SEC. As a result of the sale there will be no ongoing operations to provide cash to meet the Company's ongoing obligations as they become due. The Company has not yet made any determination about future business plans. The board of directors is evaluating several possible options, including offering the Company as a public "shell" corporation to a private operating business whereby the Company's current shareholders would retain some ownership interest in the surviving public corporation. International Sales International sales are not a material component of the Company's total revenues. Inflation Inflation has not had a material impact on the Company's operations to date, and the Company believes it will not have a material effect on operations in the next twelve months. Item 3. Quantitative and Qualitative Disclosures About Market Risk The Company owns no financial instruments or other assets, nor has it entered into any contracts or commitments, which would expose it to market risks such as interest rate risk, foreign currency exchange rate risk or commodity price risk as required to be disclosed pursuant to Regulation S-K, Item 305, of the 1934 Securities Exchange Act, as amended. Item 4. Controls and Procedures (a) Evaluation of Disclosure Controls and Procedures Disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports filed under the Exchange Act is accumulated and communicated to management, to allow timely decisions regarding required disclosures. The Company carried out an evaluation under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based upon and as of the end of the period covered by this report, the Company's Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective to ensure that the information required to be disclosed in the reports the Company files and submits under the Exchange Act is recorded, processed, summarized, and reported as and when required. PART II - OTHER INFORMATION Item 1. Litigation. The Company is not party to any litigation. Item 3. Defaults upon Senior Securities As of March 31, 2007, the Company was $563,000 in arrears in its interest payments and $193,000 in arrears in principal payments under the terms of the loans from DOOFF LLC (see Notes 2 and 5 to Financial Statements). Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits 31 and 32 Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (b) On February 1, 2007 the Company filed a report on Form 8-K disclosing the entry into an asset purchase agreement with Moving Vehicular Platforms, Inc. to sell substantially all of its assets. The asset purchase agreement was attached as an exhibit to the filing. 13 CAMERA PLATFORMS INTERNATIONAL, INC. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CAMERA PLATFORMS INTERNATIONAL, INC. /s/ Martin Perellis Date: May 8, 2007 Martin Perellis Chairman of the Board, Chief Executive and Chief Financial Officer

CAMERA PLATFORMS INTERNATIONAL INC 10-Q